Cyclical stocks are those stocks that are tied to the performance of the economy and its various sectors. These stocks tend to rise and fall in line with the business cycle, which is the natural ebb and flow of economic activity. Cyclical stocks include companies that produce consumer discretionary goods, such as automobiles, apparel, and furniture, as well as those in the industrials, materials, and energy sectors.
Investors often turn to cyclical stocks during times of economic expansion when consumer and business spending is on the rise. These stocks are generally more volatile than defensive stocks, which are companies that provide essential products and services and are less sensitive to economic cycles. Cyclical stocks are also more likely to perform poorly during economic downturns, as demand for their products and services decreases.
Buying cyclical stocks can be a way for investors to capitalize on an economic upswing, but it is important to be mindful of the risks involved. It is crucial to have a strong understanding of the specific sector in which the company operates, as well as the broader economic trends that may impact the stock’s performance. As with any investment, it is essential to conduct thorough research and analysis before making a decision to buy cyclical stocks. If this has you keen on investing in the cyclical sector, here are three cyclical stocks to watch in the stock market now.
Cyclical Stocks To Invest In [Or Avoid] Now
- Costco Wholesale Corporation (NASDAQ: COST)
- Starbucks Corporation (NASDAQ: SBUX)
- JP Morgan Chase & Co. (NYSE: JPM)
Costco Wholesale Corp. (COST Stock)
First up, Costco Wholesale Corporation (COST) is a membership-based warehouse club that offers a wide variety of merchandise, including groceries, electronics, and appliances, at discounted prices to its members. With over 800 warehouse locations worldwide, Costco has a loyal customer base that appreciates its value proposition.
Earlier this month, Costsco Wholesale released its 2nd quarter 2023 financial results. In the report, the company posted earnings of $3.30 per share, along with revenue of $55.3 billion. For context, Wall Street’s consensus estimates for the quarter were earnings of $3.20 per share, and revenue estimates of $55.5 billion. Additionally, revenue increased by 6.5% versus the same period, the previous year.
In 2023 so far, shares of COST stock have increased by 7.23% year-to-date. While, during Thursday’s premarket trading session, Costco stock is trading slightly down by 0.11% at $485.50 per share.
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Starbucks (SBUX Stock)
Following that, Starbucks Corporation (SBUX) is a coffeehouse chain that operates over 30,000 stores globally. Known for its premium coffee, beverages, and snacks, Starbucks has built a strong brand identity and a dedicated following. In addition to its retail stores, Starbucks also has a significant presence in grocery stores and through its mobile ordering app.
Last month, Starbucks reported its Q1 2023 earnings results. Specifically, the company reported earnings of $0.75 per share, with revenue of $8.7 billion. This is in comparison with Wall Street’s consensus estimates which were earnings of $0.77 per share, on revenue of $8.8 billion. Meanwhile, Starbucks also reported that revenue grew by 8.2% on a year-over-year basis.
Year-to-date, shares of SBUX stock are up 1.66% so far. While on Thursday’s pre-market trading session, Starbucks stock is trading modestly lower ahead of the open by 0.28% at $102.21 a share.
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JP Morgan Chase & Co. (JPM Stock)
Finally, JP Morgan Chase & Co. (JPM) is a leading financial services firm that offers a range of financial products and services to individuals, businesses, and institutions. For a sense of scale, JP Morgan is one of the largest banks in the United States.
Back in January, JPM reported better-than-expected 4th quarter 2022 earnings results. Diving in, the company showed Q4 2022 earnings of $3.57 per share, on revenue of $47.4 billion. For context, analysts’ consensus estimates for the quarter were an EPS of $3.11 and revenue of $34.2 billion. Moreover, JPM also notched in a 54.6% increase in revenue in comparison to the same time period, the prior year.
So far this year, shares of JPM stock have advanced by 1.98% YTD. While during Thursday’s pre-market trading action, JPM stock is trading modestly lower by 0.18% at $137.55 per share.
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